Barrick Gold Corp. investors including Canada’s six biggest pension fund managers have criticized as excessive an $11.9 million signing bonus paid to John Thornton, co-chairman of the world’s biggest gold producer.
TORONTO STAR

By:Star Wire services, Published on Fri Apr 19 2013

Barrick Gold Corp, already under pressure from setbacks at its largest development project and a slump in the price of gold, now faces a shareholder revolt over a “troubling” payment to a member of its board.

A group of Canada’s top pension funds, small but significant shareholders in the world’s largest gold miner, said yesterday it opposes Barrick’s $11.9 million signing bonus for co-chairman John Thornton, the man tipped as the miner’s next chairman.

“This compensation is inconsistent with the governance principle of pay-for-performance and is therefore disproportionate and sets a troubling precedent in Canadian capital markets,” the group said in a statement.

Barrick has faced a raft of problems in the last few months, including a slumping gold price, and a partial halt to work at one of its main growth projects, Pascua-Lama, on the border of Argentina and Chile.

Shares of the company have fallen more than 37 per cent this month and have more than halved in value over the last year.

The stock was down almost 1 per cent on Friday, after the group of funds said it would vote against Barrick’s advisory resolution on executive compensation and against the election of the members of the compensation committee at Barrick’s annual meeting, on April 24 in Toronto when it will also report results.

Barrick declined comment on Friday, but in its proxy circular to shareholders ahead of next Wednesday’s, Barrick said the advisory resolution on executive compensation is “not binding” on the board.

“The board and, in particular, the compensation committee will consider the outcome of the vote as part of its ongoing review of executive compensation,” it added.

Thornton, widely expected to succeed Barrick founder and Chairman Peter Munk, has been a director of the company since February, 2012 and is also on the boards of China Unicom (Hong Kong) Ltd, HSBC Holdings, and Ford Motor Co .

A former president at Goldman Sachs, he has also served on the boards of News Corp and Intel Corp, among others.

In a letter to shareholders released in March, Munk said it was time for Barrick to “consider a path to new leadership at our board level.” He listed the qualifications Barrick was looking for, and singled out Thornton as his likely successor.

The pension funds are not alone in expressing concern about payments from Barrick. Earlier this month, proxy advisory firm Glass Lewis, advised its clients to vote against Barrick’s executive compensation plan.

“We believe shareholders should question the nature of these payments and if it is the best use of the company’s capital, particularly following the company’s results for the year,” Glass Lewis said in its April. 6 report.

Barrick reported a net loss of $665 million in 2012, due to a large writedown. Excluding items, the company reported profits of $3.83 billion, down from $4.67 billion, a year earlier.

The group represents about 3.46 per cent of Barrick’s ownership, or some 34.8 million shares outstanding, according to Thomson Reuters data and fund disclosures. That stake was worth around $640 million at Thursday’s closing price of $18.44.

The concern by the money managers follows a sharp drop in Barrick shares in recent days amid a plunge in the price of gold and a Chilean court decision last week that ordered a halt to construction at the miner’s $8-billion Pascua-Lama project due to environmental concerns.

Moody’s Investors Service also placed Barrick under review for a potential ratings downgrade this week.

Work on Barrick’s Pascua-Lama project was suspended by the appeals court in the northern Chilean city of Copiapo amid environmental concerns about the construction of the world’s highest-altitude gold and silver mine.

The start date for the mine which straddles the Andean border with Argentina has already been delayed by more than six months to the second half of 2014. Cost overruns have seen the price tag rise from $3 billion to more than $8 billion.

Barrick has said it will work to address environmental and other regulatory requirements on the project in Chile while construction will continue on the portion of the project in Argentina.

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